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View profile for Zed Francis, graphic

CIO & Co-Founder at Convexitas

NVDA officially became king! Thank you to Schwab Network and Oliver Renick for having me on during an exciting day for markets. Is volatility actually low? When almost anyone thinks about volatility, they are referencing S&P500 volatility. SPX volatility, both realized and implied, has been mid-teens percentile of the last decade for much of the last year. Volatility is low… BUT this is NOT the case for single names. The top-30 single names by market cap have been realizing ~50th percentile of the last decade. Volatility is normal when looking at specific securities. How we get to this dramatic difference in realized risk is low realized correlation. Everything is moving normally under the hood but in different directions causing the collective of all returns to be very stable. Make sure YOUR portfolio has the ability to participate in the concentrated performance of a few winners AND has a tax efficient risk tool to truncate the tail of this concentrated exposure. Actively managed long convexity strategies utilizing S&P500 options are a great tool for the job. Index volatility is low due to low correlation and the movement of the index is most tied to the concentrated risk. Improve Portfolio Construction during the calm so you can be proactive during the panic. #portfolioconstruction #volatility #options https://lnkd.in/gffpg-Pz

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Ed Mayes

Owner, EDCO PARTNERS, INC.

2mo

Thanks for sharing

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